Speculation is one of the economic activity that is prohibited in Islam. It’s an act that you bet some amount of money to make more. When you win it, surely your money would be doubled many times. But it is indeed a prohibited act in Islam. There are many forms of money speculation, such as gambling (personal gambling or casino gambling), riba, and ghahar. This time, let’s learn more about riba and gharar, as part of the prohibition of speculation in Islam.
Prohibition of Riba
Riba can be described as an usury (money loan in Islam that enriched the lender), an exploitative gained that made in a business or trade in Islamic law. The prohibition of riba has mentioned many times in the Quran, strengthen by Hadith by the Prophet (SAW). But sadly the practice of riba is still done until today, as it often used as the Islamic terms of interest charges on loans. Many Muslims stated that the interest used by commercial bank is a form of riba.
Ibn Majah and Ibn Kathir quotes what Umar ibn Al Khattab has once said,
“There are three things, If God’s Messenger had explained them clearly, it would have been dearer to me than the world and what it contains: (These are) kalalah, riba, and khilafah.”
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There are two types of riba in Islam.
- Riba Duyun described as an unjustified increment in money lending (whether it’s in kind or by cash) above the principal amount in the beginning.
- Riba Buyu’ happen in a trading or transaction, where the commodities that being exchanged is in unequal amount of the same kind and the same basis.
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Quran Verses on Riba
The porhibition of riba comes from none other than Allah SWT Himself. Riba, translated as usury, mentioned several times inside the Holy Quran:
- Al Baqara verse 275
Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, “Trade is [just] like interest.” But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah . But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.
- Al Baqara verse 278
O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers.
- Ali Imraan verse 130
O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful.
- An Nisaa verse 161
And [for] their taking of usury while they had been forbidden from it, and their consuming of the people’s wealth unjustly. And we have prepared for the disbelievers among them a painful punishment.
- Ar Ruum verse 39
And whatever you give for interest to increase within the wealth of people will not increase with Allah . But what you give in zakah, desiring the countenance of Allah - those are the multipliers.
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Hadith About Riba
- From Jabir, about the payer and the receiver of the interest
The Prophet, , may cursed the receiver and the payer of interest, the one who records it and the two witnesses to the transaction and said: “They are all alike [in guilt].” - Tirmidhi, Muslim.
- From Abu Hurayrah, about the punishment for a Muslim from riba
The Prophet, , said: “On the night of Ascension I came upon people whose stomachs were like houses with snakes visible from the outside. I asked Gabriel who they were. He replied that they were people who had received interest.” - Ibn Majah
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Prohibition of Gharar
Gharar is equal with many prohibited money speculation in Islam, such as riba (usury), and maysir (gambling). Gharar itself described as selling goods that has not existed yet. Like selling the fish that hasn’t caught yet or selling the fruit that are not harvested yet. Gharar can be simply translated s “risk” and “uncertainty”. It is due to the object that has not been exist, yet has been traded to other people, then the risk and uncertainty is all on the buyers.
The prohibition of gharar has been clearly stated by the Prophet (SAW) himself, and many examples are also followed. Such as selling the fish in the sea, unborn calf in it’s mother’s womb, semen and unfertilized egg of camels, unharvested fruits from the trees, and many more. Those goods are considered as non existed, since the buyers cannot see them with their own eyes, nor checking the quality of the goods. There are also no guarantee that the good is in a good condition.
On the authority of Abu Said Al Khudriy (RA), Ahmad and Ibn Majjah narrated,
The Prophet (PBUH) has forbidden the purchase of the unborn animal in its mother’s womb, the sale of the milk in the udder without measurement, the purchase of spoils of war prior to their distribution, the purchase of charities prior to their receipt, and the purchase of the catch of a diver.
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Gharar in Modern Economics
In the modern economics, the practice of gharar is found in the insurance and financial derivatives. It is a speculation because the premia should pay monthly in a certain amount, and they will eventually collect a large sum of money, more than the amount the have paid. But there also chance that the insured constantly paying monthly without ever collecting the money
Doing speculation regarding money in Islam is indeed prohibited. It’s an act that Allah SWT has directly prohibited, so let’s all of us only earn money in halal ways.